Sending in KG - what did they think was going to happen?

[D Dub]

To suggest that owners who lost money did so by burning through their share is just silly to me. There is less money to be had because the league is faltering.

reality check-
the NBA just had it's most successful season since Jordan played

[Greenbean]

To suggest that owners who lost money did so by burning through their share is just silly to me. There is less money to be had because the league is faltering.

reality check-
the NBA just had it's most successful season since Jordan played

And yet teams still lost money. The finals generated alot of interest but overall the league has been on a downward trend for years. There have been peaks and valleys but overall...declining interest.

[Chris]

just saying, most average business owners would LOVE to have a guaranteed 43% margin.  
if they can manage living, why can't these tycoons?

What do you mean by a guaranteed 43% margin?  That 43% needs to go towards every expense other than the players salaries. 

Can you elaborate?

[Greenbean]

57% is still 57%.

But 43% is still 43%, and that's the part that I was talking about. There's no question that altering the BRI split would solve the profitability problems, but it's not entirely clear that's the only viable way to do it.

I will be honest, I don't care if the NBA players make a few less millions.

I don't care either, but I very much do not like some of the arguments that are being made around here.

And teams are losing money at 43%.

just like hitting jumpshot, running a business is a skill

if you're an owner with a publicly funded arena, can sell $12 beers at will, and are guaranteed a 43% margin


but still can't turn a profit...  maybe it's time to enroll in MBA classes

just saying, most average business owners would LOVE to have a guaranteed 43% margin.  
if they can manage living, why can't these tycoons?

Because the product is not as compelling as it once was and it doesnt generate as much money overall.


Costs to run teams rise every year and if your 43% share of the money isnt rising concurrently, you will start to bleed. The players just get less overall, but still profit.

Im pretty sure most owners know how to run a business. Its not like they took out a loan from a bank and started these teams from scratch. They are successful businessmen.

[fairweatherfan]

57% is still 57%.

But 43% is still 43%, and that's the part that I was talking about. There's no question that altering the BRI split would solve the profitability problems, but it's not entirely clear that's the only viable way to do it.

I will be honest, I don't care if the NBA players make a few less millions.

I don't care either, but I very much do not like some of the arguments that are being made around here.

And teams are losing money at 43%.

just like hitting jumpshot, running a business is a skill

if you're an owner with a publicly funded arena, can sell $12 beers at will, and are guaranteed a 43% margin


but still can't turn a profit...  maybe it's time to enroll in MBA classes

just saying, most average business owners would LOVE to have a guaranteed 43% margin.  
if they can manage living, why can't these tycoons?

Because the product is not as compelling as it once was and it doesnt generate as much money overall.

NBA revenues have been rising over time - that's why the salary cap's gone up as well:



The argument is that the non-player expenses are rising, not that the league is making less money overall, because it isn't.

[Greenbean]

NBA revenues have been rising over time - that's why the salary cap's gone up as well:



The argument is that the non-player expenses are rising, not that the league is making less money overall, because it isn't.

Yes the revenue has gone up but at a much slower rate than when the last CBA was signed. Between 1990 and 2000, rose by over 3x. The last ten years it has risen by less than 2x and as you say, expenses have steadily increased.

[LB3533]

If the owners want 50/50 or 53/47 in their favor then the players should ask for "no max contracts" and no team salary cap.

[dtrader]

NBA revenues have been rising over time - that's why the salary cap's gone up as well:



The argument is that the non-player expenses are rising, not that the league is making less money overall, because it isn't.

Yes the revenue has gone up but at a much slower rate than when the last CBA was signed. Between 1990 and 2000, rose by over 3x. The last ten years it has risen by less than 2x and as you say, expenses have steadily increased.

If anything, I would say that this chart shows NBA revenues to have been increasing at a very steady rate since the last CBA.  Making a comparison from 90-00 versus 00-10 isnt really suitable considering the global market collapse in 08-09.  The fact that the NBA was able to maintain relatively steady revenues following such a dramatic shock, is a testament to the strength of the league.  The most interesting thing from that chart, is how well the gaps up illustrate the Jordan effect. If I was negotiating on the players side, this would be example A. in my "the players make the league" analysis.

[nickagneta]

Here's.my problem with the whole situation and the part that I think loses credibility for tue owners. Its a $4 billion industry which means the average team is bringing in $130 million in revenue. 57% goes to player salaries if you stay around the cap. Lets say the average team is over the cap at 60% or $78 million in player salaries. Thar leaves the average team with $58 million to pay non playing personnel salarues qnd overhead. Mostif not all teams have leases and very friendly ones at that. So where is all the other money going?

And I dont want to hear about payments for the purchase of the team because that should have been pre-figured into any good business model. And actually, most owners finance a huge portion of their teams for tax break purposes not because they cant affird.to.buy them outright.

Also, if the owners claims of losing more than $300 million a year as a total business model are true, why are they willing to settle at a 50/50 split which amounts to a savings of less than $300 million?

Lastly, if owning an NBA franchise is so tough to make a profit at why did the team with one of the worst home attendances ovwr the last five years just get sold in the midst of a  lockout.

[dtrader]

Thats another part of the whole "teams are losing $" arguement that I just dont understand.  People always say "this is a business"...thats why the owners have to make these demands and regain profitability.  But if this was just a normal business operation, and the stated losses were real, then the smart business decision for many of the owners would appear to be selling their stakes.  Why don't they?  It's not like there aren't buyers.  Any time a team is up for sale theres a line of people trying to scoop them up. Especially now, that owning a stake in a team is like the new celebrity status symbol...if there concern is seeing a return on their investment...sell.

[Chris]

But if this was just a normal business operation, and the stated losses were real, then the smart business decision for many of the owners would appear to be selling their stakes.  Why don't they? 

Well, this is simple.  Because they are a collective bargaining session away from turning a business that is not (or marginally) profitable, to a company that is very profitable. 

Most of the owners are in this for the long term, and they know that with a new CBA (which they have known they were going to hold out for, for years now), as well as a new profit sharing system (that goes hand and hand with the new CBA) it will be a very profitable business, making up for any losses they have had.

It would be like if a company was losing money because they had negotiated a deal for supplies that ended up being well over market value, but they knew their contract was up in 2 years, and that when they get to renegotiate, they knew the cost would drop considerably.  You wouldnt sell then, would you?

[fairweatherfan]

NBA revenues have been rising over time - that's why the salary cap's gone up as well:



The argument is that the non-player expenses are rising, not that the league is making less money overall, because it isn't.

Yes the revenue has gone up but at a much slower rate than when the last CBA was signed. Between 1990 and 2000, rose by over 3x. The last ten years it has risen by less than 2x and as you say, expenses have steadily increased.

I didn't say expenses have increased, I said that's the argument the owners are making, because the argument that revenues are decreasing is false. 

I don't know to what extent non-player expenses have increased, and neither does anybody else here, because the league doesn't open its books to the public. 

[guava_wrench]

NBA revenues have been rising over time - that's why the salary cap's gone up as well:



The argument is that the non-player expenses are rising, not that the league is making less money overall, because it isn't.

Yes the revenue has gone up but at a much slower rate than when the last CBA was signed. Between 1990 and 2000, rose by over 3x. The last ten years it has risen by less than 2x and as you say, expenses have steadily increased.

I didn't say expenses have increased, I said that's the argument the owners are making, because the argument that revenues are decreasing is false. 

I don't know to what extent non-player expenses have increased, and neither does anybody else here, because the league doesn't open its books to the public. 

Look at the graph you posted. The last 2 years were less that the year before that. Does that mean a decrease in revenues?

[fairweatherfan]

NBA revenues have been rising over time - that's why the salary cap's gone up as well:



The argument is that the non-player expenses are rising, not that the league is making less money overall, because it isn't.

Yes the revenue has gone up but at a much slower rate than when the last CBA was signed. Between 1990 and 2000, rose by over 3x. The last ten years it has risen by less than 2x and as you say, expenses have steadily increased.

I didn't say expenses have increased, I said that's the argument the owners are making, because the argument that revenues are decreasing is false. 

I don't know to what extent non-player expenses have increased, and neither does anybody else here, because the league doesn't open its books to the public. 

Look at the graph you posted. The last 2 years were less that the year before that. Does that mean a decrease in revenues?

Yes, but I'm referring to the long-term trend, not the year-to-year - that's what I meant by "over time".  The recession hurt NBA revenues, like it did for most businesses.

But the recent drop is by a bit over 1%, and the salary cap (and presumably revenues, since they haven't expanded or anything) is still about 30% higher than in the year prior to the last CBA. 

[CaptainJackLee]

Here's.my problem with the whole situation and the part that I think loses credibility for tue owners. Its a $4 billion industry which means the average team is bringing in $130 million in revenue. 57% goes to player salaries if you stay around the cap. Lets say the average team is over the cap at 60% or $78 million in player salaries. Thar leaves the average team with $58 million to pay non playing personnel salarues qnd overhead. Mostif not all teams have leases and very friendly ones at that. So where is all the other money going?

And I dont want to hear about payments for the purchase of the team because that should have been pre-figured into any good business model. And actually, most owners finance a huge portion of their teams for tax break purposes not because they cant affird.to.buy them outright.

Also, if the owners claims of losing more than $300 million a year as a total business model are true, why are they willing to settle at a 50/50 split which amounts to a savings of less than $300 million?

Lastly, if owning an NBA franchise is so tough to make a profit at why did the team with one of the worst home attendances ovwr the last five years just get sold in the midst of a  lockout.

Individual teams can be at 60%, but the league overall doesn't pay above 57% of the revenue in  salaries.

If the players' salaries are more than 57% of the revenue, then players have to give back that money to the owners at the end of the year.

This is a very important point that owners and their PR machine have been trying to obliterate from the public discussion. It's important because it shows that if the league started losing money as they claim, it has nothing to do with salaries but with the fact that owners were stupid enough to sky-rocket their other expenses in the middle of a recession.

So, the owners are trying to solve an issue created by their mismanagement by addressing the only expense that they were able to keep under control.

I've seen this happening many times throughout my professional career: is the distinctive mark of badly run corporation - when cost cutting is needed, pick the easy solution and not the right one. It always ends badly. I suspect that if owners had their way the financial costs of NBA franchises would climb even more from the already unsustainable numbers and in a few years we'd be talking about a government bail-out. The NHL got a very owners friendly deal just 2 years ago - and many teams are already saying they simply don't even have money to pay the minimum salary roll.

*And this doesn't even include the non-BRI part of the revenue that the owners pocket right away.